I had the pleasure of speaking at the Living Wage Foundation’s parliamentary reception last week, which celebrated the extraordinary work that has been done so far and the impact it has made after many years of campaigning.

This is an issue that is very close to my heart. I can remember, when I was a special adviser in the Department for Work and Pensions, how the cleaners left letters on the desks of ministers to raise awareness of the issue of low pay.

I can remember walking into government departments to see campaigners handing out food to draw attention to the cause – always gracious, always kind, always phenomenally well-informed.

As someone who has spent many years of my life focused on ensuring that it pays to work, I was delighted to hear at the Budget that the chancellor has restored the work allowances for families with children and for those who are working and disabled.

But we all know that, as much heavy lifting as the state does, it can’t do it all.

People want to know when they go to their jobs that their hard work is supporting their family. They want to know that if they do everything right – if they take a job and work full-time – they will not be in poverty.

And yet, new figures that have just been launched by the Social Metrics Commission show that almost 10 per cent of those in full-time work are still in poverty – a total of 2.8m people.

There is nothing more we can ask these people to do. The problem is not with them. This is a structural flaw in our economic system, and one that is in the hands of policymakers, politicians, and employers to solve.

As a society, we have a duty to ensure that everyone who takes a job and works hard to support themselves and their family is properly rewarded for doing so.

There have been so many debates on this issue. Some argue that if you raise wages, you will create unemployment. I can even remember being part of a team at Number 10 where we were concerned about whether raising the minimum wage by just 50p would cause job losses. This has not happened.

Others argue that the market will set wages fairly. However, that simply isn’t true when you factor in the impact of the welfare state.

Employers have no clear idea of what the real market wage is for employees who are also in receipt of tax credits, because their wages have been subsidised by the government for so long.

The only way to fix this problem for good is for employers to be reconnected with the employees who work for them – not in some sort of gimmicky way, but by employers asking the very real question: can my staff live on the wage I am paying them?

There is a solid business case for employers taking this seriously. Research has shown that companies that have moved their lowest paid onto a living wage salary reduce staff turnover and absenteeism and achieve greater productivity.

However, this is also about businesses simply doing the right thing, investing in their people, and ensuring that nobody who goes out and works full-time lives in poverty.

With Living Wage Week this week, I would urge all companies to restore that very natural human connection between employers and employees. Take a hard look at whether you could step up to make a real contribution to tackling poverty in the UK.

The foundation

The Legatum Institute Foundation is a registered charity (number 1140719), and a company limited by guarantee and incorporated in England and Wales (company number 7430903), registered address 11 Charles Street, London, W1J 5DW